Small caps down modestly as European rate cuts offset data gloom

Small-cap stocks opened lower, but quickly trimmed losses as enthusiasm fueled by another round of global rate cuts helped soothe the sting of yet another sobering batch of economic reports. At 9:51 a.m. ET, the Russell 2000 (NYSE:IWM) was down 0.74, or 3.83%, at 510.81.

The weekly claims report came in at 481,000, which was below the forecast of 475,000 and which included an upward revision for last week’s figure as well. The most sobering figure on the claims report was the continuing claims number, which was pegged at 3.84 million, the highest level in more than 25 years. Americans aren’t just losing jobs, they are struggling to find new ones too.

The weekly claims data often gets extra emphasis right in front of a monthly employment report, and neither the weekly claims figure or the ADP survey Wednesday have raised hopes for a bullish surprise on the monthly jobs report Friday morning. Just this morning, analysts at Goldman Sachs raised their projection for the decline in non-farm payrolls to 300,000 from 250,000 (the market consensus is minus 180,000). Goldman also was looking for the unemployment rate to climb to 6.4%, a jump of 0.3% from last month.

The market did gather some support from aggressive rate cuts overnight in Europe, with the Bank of England slashing rates by a whopping 150 basis points, which put their benchmark rates at the lowest point in some 53 years. In addition, the European Central Bank lowered rates by 50 basis points, and even the Swiss National Bank lowered rates. ECB President Jean-Claude Trichet said that the central bank will do what is needed to restore financial stability

Tech stocks paced early declines this morning, powered by a somber outlook . . .

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